“Public Use” Requirement in Eminent Domain Cases Based on Slum Clearance, Elimination of Urban Blight, and Economic Development OLGA V. KOTLYAREVSKAYA† I. INTRODUCTION While the government’s exercise of its eminent domain power has been long recognized and pre-dates the American colonies, it has always been controversial. Part of the controversy lies in the diversity of purposes for which the government utilizes this power, which includes building railroads, electricity facilities, highways, parks, and shooting ranges. The diversity of objectives to which the power of the eminent domain has been applied has resulted in legislatures and the United States Supreme Court employing different and often inconsistent justifications for their actions and has left many wondering whether a meaningful check on the government with respect to the exercise of eminent domain power exists. It is in this spirit that the recent Supreme Court’s decision in Kelo v. New London,1 which upheld the government’s exercise of power of eminent domain to address the issues of slum clearance, elimination of urban blight, and economic development problems, has done little to alleviate the fears of unchecked power and manipulation of local, state, and federal authorities for private benefit. Furthermore, while much has been made of the issue of the usurpation of the right to private property for supposed economic benefit, little has been put forth regarding the supposedly ancillary issues of the consequences to those who were most affected—the plaintiffs. Simply stated, many of the plaintiffs lived in New London because the housing was affordable and the use of eminent domain did nothing to address the issue of availability and affordability of housing for those who were forced out. For many of those who had resided there, their homes had been purchased at a time when prices were considerably lower than they were during the litigation, and the prospect of finding housing of comparable quality and convenience for their level of compensation was not taken into consideration. For investors and developers who had moved to New London more recently, the relatively † Juris Doctor candidate, University of California, Berkeley School of Law, Boalt Hall, 2006. 1 125 S. Ct. 2655 (2005). 197 198 CONNECTICUT PUBLIC INTEREST LAW JOURNAL [Vol. 5:2 depressed values made the housing affordable. In both cases, the loss of affordable housing for those who lived and worked in the city forced them to bear a burden that was not adequately considered in the process of eminent domain. Furthermore, the plaintiffs stood to lose and did lose much beyond the naked economic calculations of physical displacement, and their homes had a meaning and value that went beyond monetary compensation. In essence, the plaintiffs were not only ejected from their homes but from the greater community as well. Given the arbitrariness of the process and its tendency to favor those with the economic wherewithal and capital to propose and execute projects far beyond the economic means of most people, are there any protections for the common citizen? Is there anything to stop the nationalization of private property in the United States? The “public use” requirement—one of the constitutional checks on the government power to exercise eminent domain—has not been consistently applied to provide the balance needed to check unbridled manipulation of public authority for private gain that the framers intended it to provide. Instead, the vagueness of the terms associated with and used to define “public use” have given cover to public and private parties acting in collusion to further interests that are not in the public’s best interests. The courts must evaluate the condemnation process at every stage to ensure that the public use requirement provides a meaningful safeguard against the government’s arbitrary exercise of eminent domain power. Part I of this article traces the historic roots of eminent domain, explains the modern constitutional requirements, and most importantly, brings out that the public use requirement has been unsystematically applied. Part II summarizes the problems that courts face in analyzing cases addressing such issues as slum clearance, elimination of urban blight, and economic development. It then summarizes Kelo, the U.S. Supreme Court’s most recent 5-4 decision that addresses the public use requirement, focusing on the debate between the majority and dissent about the definition of the public use, the government’s role to promote economic development, and the roles of “unintended” third-party beneficiaries in the process. Part III then analyzes how the definitions of public use, the government’s role in economic development, and the roles of third-party beneficiaries have changed over time and across economic sectors. Specifically, in analyzing railroad, utilities, travel, and environmental cases, the answers to these three issues vary with respect to the four kinds of cases presented. Part IV highlights the inconsistencies in its interpretation of public use between the Court’s decisions on such issues as slum clearance, elimination of urban blight, and economic development when considering its own precedents in railroad, utilities, travel, and environmental cases. The definition of public use and the concomitant approaches employed with respect to slum clearance, elimination of urban 2005] “PUBLIC USE” REQUIREMENT IN EMINENT DOMAIN CASES 199 blight, and economic development cases are not consistent when compared to railroad, utilities, travel, and environmental cases, and the Court’s deference to the legislature in Kelo is surprising and aberrant. Part V urges the Court to adopt an alternative public use test, where the judiciary has a clearly defined role to check legislative decisions with respect to determination of: (1) what constitutes blight; (2) what constitutes public use; and (3) what property can be taken to remedy a determined blight. In other words, the Court would evaluate the legislative process at every meaningful step of condemnation proceedings. The conclusion addresses what the city of New London should have done to comply with the proposed test. I. EMINENT DOMAIN CONSTITUTIONAL REQUIREMENTS The sovereign’s or nation’s right to exercise the power of eminent domain2 and the right of the landowner to compensation in takings predate “either the federal or state constitutions and are as old as political society.”3 The early Roman Empire relied on the power of eminent domain to build roads.4 The practice of eminent domain existed in England long before the founding of American colonies.5 Similar to current U.S. eminent domain law, English law required “interposition of the legislature.”6 Yet the legislature could not “absolutely strip . the subject of his property, in arbitrary manner, but by giving him a full indemnification and equivalent for the injury thereby sustained.”7 The modern eminent domain principle in the United States resides in the Fifth Amendment of the United States Constitution: “[N]o person shall be . deprived of life, liberty, or property, without due process, of law; nor shall private property be taken for public use, without just 2 Katherine M. McFarland, Privacy and Property: Two Sides of the Same Coin: The Mandate for Stricter Scrutiny for Government Uses of Eminent Domain, 14 B.U. PUB. INT. L.J. 142, 144 (2004). 3 6A WILLIAM MEADE FLETCHER, FLETCHER CYCLOPEDIA OF PRIVATE CORPORATIONS § 2900 (perm. ed., rev. vol. 2005). 4 Legal scholar and writer, Grotius, originated the term “eminent domain” in the seventeenth century. See Errol E. Meidinger, The “Public Uses” of Eminent Domain: History and Policy, 11 ENVTL. L. 1, 7 (1980); William B. Stoebuck, A General Theory of Eminent Domain, 47 WASH. L. REV. 553, 553–54 (1972); Elizabeth A. Taylor, The Dudley Street Initiative and the Power of Eminent Domain, 36 B.C. L. REV. 1061, 1062 (1995) (pointing out that little direct evidence exists on early Roman Empire use of eminent domain). 5 See McFarland, supra note 2, at 145; FLETCHER, supra note 3, § 2900; Taylor, supra note 4, at 1062. 6 Gardener v. Vill. of Newburgh, 1 N.Y. Ch. Ann. 332 (1816) (discussing similarities between English and U.S. takings law); McFarland, supra note 2, at 145–47 (arguing that the Founding Fathers were strongly committed to protection of private property and early eminent domain cases followed a strict due process analysis). 7 Gardener, 1 N.Y. Ch. Ann. at 332 (emphasizing the importance of a “reasonable price”) (quoting Blackstone). 200 CONNECTICUT PUBLIC INTEREST LAW JOURNAL [Vol. 5:2 compensation.”8 Thus, when the federal or state government9 exercises the power of eminent domain, it must observe two requirements—“public use” and “just compensation”—to comply with the Fifth Amendment.10 For the purposes of the Fifth Amendment, the “definition of property is broad, encompassing the entire group of rights incidental to ownership.”11 States promulgated similar requirements in their state constitutions to limit the state governments’ ability to exercise eminent domain.12 Thus, because the Fifth Amendment applies to all states through the Fourteenth Amendment, “there is a possibility of a federal question in every taking by eminent domain under state authority, even if all requirements of the constitution of the state are held to have been complied with.”13 Many scholars trace the origin of eminent domain in the United States to the opinion of Chancellor Kent in Gardner v. Village of Newburgh.14 In Gardener, Chancellor Kent issued an injunction against the statutorily authorized taking of the plaintiff’s right to use and enjoyment of a stream because he was not justly compensated.15 Chancellor Kent stressed that “to render the exercise of the power valid, a fair compensation must, in all cases, be previously made to the individuals affected, under some equitable assessment to be provided by law.”16 Chancellor Kent also stressed the importance of the public use requirement, but without specifically addressing the point in the case before him.17 While the “just compensation” requirement is fairly clear, the courts 8 U.S.